A settlement is a process of correcting a negative balance.
If you have a negative amount in your wallet, Bitfinex will take a currency with a positive balance and exchange it with a currency that has a negative balance at the market rate.
For example, you complete a trade, and Bitfinex needs to charge a trading fee of 0.1 BTC, but you only have USD in your wallet and no BTC. In this case, Bitfinex settles the charge by converting the necessary USD available in the trader’s account into BTC. To make this conversion, the rate used is the last ask price (if Bitfinex settles a negative BTC balance) or the last bid price (if Bitfinex settles a negative USD balance).
The currency primarily preferred to settle the negative balance will be chosen based on when it was added on Bitfinex; the older currencies will be used first to settle negative balances.
Important: However, regardless of when they were added to Bitfinex, tokens that have been subjected to a haircut will be used last, and some currencies that are considered high risk and have significant haircuts will not settle any negative balances.
Note: The respective haircuts applied to the currencies are regularly updated and can be checked by clicking on the Collateral Info tab under the summary of your Trading page.
Important: If you have a negative balance on your account, you will be unable to withdraw funds from Bitfinex. Additionally, a negative balance of more than $50 will restrict you from transferring funds out of your Bitfinex margin wallet until it is settled.
If you have any questions, please feel free to reach out to Bitfinex Support. We are happy to help!